Bank of America-Merrill Lynch lowers USD/CNY 2018 forecast

Bank of America-Merrill Lynch (BAML) lowered their 2018 forecasts for the Chinese Yuan in a research note. Despite the lower revision, BAML's projections are still higher compared to other forecasts, calling for 6.4000 by the end of 2018's fourth quarter.

Key highlights:

• FX selling by Chinese exporters, foreign portfolio investment into Chinese government bonds and equities driving Yuan lower.
• BAML's 2018 Q1 forecast also lowered from 6.9500 to 6.5000.
• Yuan expected to weaken further on deteriorating Chinese growth and inflation, as well as policy makers allowing more capital to flow out of China.
• BAML expects the Chinese economy to grow by 6.8% in 2018, versus 2017's 6.9%.